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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 29, 1998
THE PITTSTON COMPANY
(Exact Name of registrant as specified in its charter)
Virginia 1-9148 54-1317776
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
1000 Virginia Center Parkway
P.O. Box 4229
Glen Allen, VA 23058-4229
(Address of principal (Zip Code)
executive offices)
(804) 553-3600
(Registrant's telephone number, including area code)
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Item 5. Other Events
The Pittston Company has announced earnings for the second quarter of 1998
for the Pittston Brink's Group, Pittston BAX Group and Pittston Minerals Group.
Press releases dated July 29, 1998, are filed as exhibits to this report and are
incorporated herein by reference.
EXHIBITS
99(a) Registrant's Pittston Brink's Group press release dated July 29, 1998.
99(b) Registrant's Pittston BAX Group press release dated July 29, 1998.
99(c) Registrant's Pittston Minerals Group press release dated July 29, 1998.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE PITTSTON COMPANY
(Registrant)
By /s/ James B. Hartough
---------------------
Vice President-
Corporate Finance and
Treasurer
Date: July 29, 1998
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EXHIBITS
Exhibit Description
99(a) Registrant's Pittston Brink's Group press release dated July 29, 1998.
99(b) Registrant's Pittston BAX Group press release dated July 29, 1998.
99(c) Registrant's Pittston Minerals Group press release dated July 29, 1998.
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PITTSTON BRINK'S GROUP EARNS
$.52 PER SHARE IN THE SECOND QUARTER
Richmond, VA - July 29, 1998 - Pittston Brink's Group reported net
income of $20.6 million ($.52 per share) in the second quarter ended June 30,
1998, an increase of 16% compared to $17.7 million ($.46 per share) earned in
the second quarter of 1997. Combined second quarter revenues of Brink's,
Incorporated and Brink's Home Security, Inc. increased 34% to $359.8 million.
For the six months ended June 30, 1998, Pittston Brink's Group generated net
income of $37.6 million ($.96 per share), an increase of 14% compared to $33.0
million ($.85 per share) for the comparable period in 1997. Combined revenues
for the first six months of 1998 were $670.1 million, up from $520.2 million in
1997.
BRINK'S, INCORPORATED (BRINK'S)
Brink's worldwide consolidated revenues increased 38% to $309.8 million
in the second quarter of 1998 and operating profits amounted to $24.0 million, a
26% increase over prior year's second quarter due primarily to improvements in
North America and Europe. For the first six months of 1998, Brink's worldwide
revenues increased 32% to $571.7 million and operating profits grew 32% to $46.0
million from $34.9 million in the comparable period in 1997.
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Revenues from North American operations (United States and Canada) were
$135.7 million in the second quarter, 15% higher than in the comparable period
in 1997. North American operating profits for the quarter increased 23% to $11.9
million due to improved results across most product lines, particularly armored
car operations which include ATM services. For the six months ended June 30,
1998, North American revenues and operating profits were $265.1 million and
$21.9 million, respectively, compared to $228.4 million and $17.4 million,
respectively, for the prior period in 1997.
Revenues and operating profits from European subsidiaries and affiliates
amounted to $90.9 million and $6.4 million, respectively, in the second quarter,
compared to $33.7 million and $1.3 million, respectively, in the comparable 1997
periods. The increase in revenues was due to the acquisition, in the first
quarter of 1998, of nearly all the remaining shares of its affiliate in France
(previously 38% owned). The operating profit increase was due to the improved
results of the operations in France as well as the increased ownership position.
In the first six months of 1998, revenues and operating profits grew to $140.7
million and $7.2 million, respectively, compared to $66.4 million and $1.7
million, respectively, for the same period in 1997. The acquisition and improved
results in France, partially
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offset by losses in Belgium relating to the first quarter 1998 industry-wide
strike, drove the year-to-date results.
Revenues from Latin American subsidiaries were $76.3 million in the
second quarter, 15% higher than the same period in 1997 due primarily to growth
in Venezuelan operations. Operating profits from subsidiaries and affiliates
were $5.4 million in the second quarter, down 28% from $7.4 million in the
comparable period in 1997. Expenses associated with start-up operations in
Argentina as well as an equity loss in the 20% owned Mexican affiliate more than
offset improved results in Venezuela. For the six months ended June 30, 1998,
revenues and operating profits in Latin America were $152.8 million and $16.0
million, respectively, increasing 21% and 8%, respectively, over the comparable
1997 period.
Revenues and operating profits from Asia/Pacific subsidiaries and
affiliates were $6.8 million and $0.4 million, respectively, in the quarter.
Revenues were essentially unchanged over the comparable 1997 period and
operating profits decreased $0.3 million. Revenues and operating profits of
$13.1 million and $0.8 million in the year-to-date period were $0.1 million and
$0.2 million lower respectively, compared to the same period in 1997. Brink's
has recently expanded its armored car operations in Australia, providing
valuables transport, ATM services
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and currency processing services to a number of financial institutions,
including the largest bank in Australia.
Brink's continued its international strategy of gaining control of
affiliated operations or exiting certain markets. During the second quarter
Brink's increased its ownership to 100% from 50% in its German affiliate,
increased its majority ownership in its Colombian affiliate by 7.5% to 58% and
divested its 24.5% interest in its Italian affiliate. BRINK'S HOME SECURITY,
INC.
Brink's Home Security's revenues totaled $50.1 million in the second
quarter of 1998, a 13% increase over the year earlier period. Operating profits
increased 5% to $13.9 million. Operating profits from on-going monitoring and
service operations increased to $18.2 million from $15.9 million as a result of
the increased subscriber base and higher average monthly monitoring fees for
existing subscribers. The net loss on marketing, sales and installation
activities increased to $4.3 million from $2.7 million in the second quarter of
1997.
Brink's Home Security installed approximately 28,600 new subscribers
during the quarter and the subscriber base totaled almost 548,000 on June 30,
1998, a 14% increase from a year earlier. The disconnect rate in the first half
of 1998 was 7.3%. As a result of the growth in subscribers and higher average
monitoring fees
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per subscriber, monthly recurring revenues increased 18% to $14 million as of
June 1998.
Brink's Home Security is continuing a number of quality improvement
programs designed to further enhance customer service while improving
productivity and customer retention. The company's reputation for high quality
service and reliability has made it a premiere service provider in the home
security industry. Brink's Home Security continued its geographic expansion in
the second quarter by entering the Tulsa, Oklahoma market.
FINANCIAL-CONSOLIDATED
The Pittston Company (the "Company") reported consolidated revenues of
$927.1 million in the second quarter ended June 30, 1998 compared to $826.2
million for the comparable period in 1997. Net income was $20.8 million compared
to $14.7 million in the prior year's quarter. Total debt at June 30, 1998 was
$426.2 million. For the first six months of 1998, consolidated revenues were
$1,790 million and net income was $33.6 million. A year ago, consolidated
revenues for the first six months were $1,608 million and net income was $36.0
million. Consolidated cash flow from operating activities totaled $82.2 million
for the six months ended June 30, 1998.
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During the second quarter of 1998, under the share repurchase programs
authorized by the Board of Directors of the Company, the Company purchased
227,400 shares of Pittston BAX Group Common Stock at a cost of $3.7 million and
114,100 shares of Pittston Brink's Group Common Stock at a cost of $4.4 million.
As of June 30, 1998, the Company had remaining authority to purchase over time 1
million shares of Pittston Minerals Group Common Stock, 0.9 million shares of
Pittston Brink's Group Common Stock, 0.7 million shares of Pittston BAX Group
Common Stock and an additional $24.2 million of its Series C Convertible
Preferred Stock. The aggregate purchase price limitation for all common stock
purchases was $13.4 million at June 30, 1998.
* * * * * * * * * *
Pittston Brink's Group Common Stock (NYSE-PZB), Pittston BAX Group
Common Stock (NYSE-PZX) and Pittston Minerals Group Common Stock (NYSE-PZM)
represent the three classes of common stock of The Pittston Company, a
diversified company with interests in security services through Brink's,
Incorporated and Brink's Home Security, Inc. (Pittston Brink's Group), global
freight transportation and logistics management services through BAX Global Inc.
(Pittston BAX Group) and mining and minerals exploration through Pittston Coal
Company and Pittston Mineral Ventures (Pittston Minerals Group). Copies of the
Pittston BAX Group and Pittston Minerals Group earnings releases are available
upon request.
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PITTSTON BRINK'S GROUP
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
BRINK'S, INCORPORATED
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
(IN THOUSANDS) 1998 1997 1998 1997
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<S> <C> <C> <C> <C>
OPERATING REVENUES
North America (United States & Canada) $ 135,687 117,616 265,054 228,388
Latin America 76,348 66,163 152,840 125,859
Europe 90,909 33,727 140,722 66,355
Asia/Pacific 6,807 7,044 13,058 13,147
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Total operating revenues $ 309,751 224,550 571,674 433,749
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OPERATING PROFIT
North America (United States & Canada) $ 11,865 9,657 21,932 17,411
Latin America 5,354 7,445 16,031 14,882
Europe 6,388 1,291 7,213 1,667
Asia/Pacific 440 750 790 984
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Total operating profit $ 24,047 19,143 45,966 34,944
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DEPRECIATION AND AMORTIZATION $ 12,255 6,811 20,674 14,358
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</TABLE>
BRINK'S HOME SECURITY, INC.
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
(DOLLARS IN THOUSANDS) 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES $ 50,061 44,225 98,471 86,410
OPERATING PROFIT (LOSS)
Monitoring and service $ 18,152 15,944 35,334 30,534
Net marketing, sales and installation (4,257) (2,671) (7,937) (4,482)
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating profit $ 13,895 13,273 27,397 26,052
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DEPRECIATION AND AMORTIZATION $ 9,103 7,116 17,905 13,782
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MONTHLY RECURRING REVENUES (a) 13,976 11,834
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Number of subscribers:
Beginning of period 528,607 464,007 511,532 446,505
Installations 28,557 26,798 55,307 52,388
Disconnects (9,506) (8,740) (19,181) (16,828)
- ------------------------------------------------------------------------------------------------------------------------------------
End of period 547,658 482,065 547,658 482,065
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</TABLE>
(a) Monthly recurring revenues are calculated based on the number of subscribers
at period end multiplied by the average fee per subscriber received in the last
month of the period for monitoring, maintenance and related services.
<PAGE>
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PITTSTON BRINK'S GROUP
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT Three Months Ended June 30 Six Months Ended June 30
PER SHARE DATA) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $ 359,812 268,775 670,145 520,159
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Operating expenses 273,523 197,741 506,955 385,649
Selling, general and
administrative expenses 50,705 40,296 97,260 76,359
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Total costs and expenses 324,228 238,037 604,215 462,008
Other operating income (expense), net 4 117 990 (504)
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Operating profit 35,588 30,855 66,920 57,647
Interest income 624 553 1,488 1,206
Interest expense (5,050) (2,664) (8,865) (4,903)
Other income (expense), net 1,484 (1,447) 147 (3,105)
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Income before income taxes 32,646 27,297 59,690 50,845
Provision for income taxes 12,076 9,558 22,083 17,800
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Net income $ 20,570 17,739 37,607 33,045
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Net income per common share:
Basic $ .53 .46 .97 .86
Diluted .52 .46 .96 .85
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Weighted average common shares outstanding:
Basic 38,713 38,230 38,596 38,209
Diluted 39,206 38,703 39,143 38,659
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEGMENT INFORMATION
<TABLE>
<S> <C> <C> <C> <C>
Operating revenues:
Brink's $ 309,751 224,550 571,674 433,749
BHS 50,061 44,225 98,471 86,410
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Total operating revenues $ 359,812 268,775 670,145 520,159
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Operating profit:
Brink's $ 24,047 19,143 45,966 34,944
BHS 13,895 13,273 27,397 26,052
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Segment operating profit 37,942 32,416 73,363 60,996
General corporate expense (2,354) (1,561) (6,443) (3,349)
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Total operating profit $ 35,588 30,855 66,920 57,647
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</TABLE>
See accompanying notes.
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PITTSTON BRINK'S GROUP
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
(IN THOUSANDS) 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 42,293 37,694
Accounts receivable, net of estimated amounts
uncollectible 225,582 160,912
Inventories and other current assets 55,852 48,518
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Total current assets 323,727 247,124
Property, plant and equipment, at cost, net of
accumulated depreciation and amortization 442,743 346,672
Intangibles, net of accumulated amortization 59,884 18,510
Other assets 73,633 80,024
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Total assets $ 899,987 692,330
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LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities $ 287,803 178,348
Long-term debt, less current maturities 94,564 38,682
Other liabilities 101,530 94,820
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Total liabilities 483,897 311,850
Shareholder's equity 416,090 380,480
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Total liabilities and shareholder's equity $ 899,987 692,330
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
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PITTSTON BRINK'S GROUP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
(IN THOUSANDS) 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 37,607 33,045
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 38,693 28,218
Provision for deferred income taxes 5,683 1,184
Other, net 7,392 8,405
Changes in operating assets and liabilities, net of effects of acquisitions
and dispositions:
Increase in receivables (8,754) (5,852)
Increase in inventories and other current assets (8,941) (5,038)
Decrease in current liabilities (6,290) (3,745)
Other, net (9,271) (1,789)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 56,119 54,428
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Cash flows from investing activities:
Additions to property, plant and equipment (65,373) (54,234)
Proceeds from disposal of property, plant
and equipment 1,368 1,209
Acquisitions, net of cash acquired (5,526) (53,303)
Other, net (993) 6,834
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Net cash used by investing activities (70,524) (99,494)
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Cash flows from financing activities:
Net additions to debt 4,627 40,502
Payments from Minerals Group 16,700 15,083
Share and other equity activity, net (2,323) (4,562)
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Net cash provided by financing activities 19,004 51,023
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Net increase in cash and cash equivalents 4,599 5,957
Cash and cash equivalents at beginning of period 37,694 20,012
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Cash and cash equivalents at end of period $ 42,293 25,969
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
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THE PITTSTON COMPANY AND SUBSIDIARIES
PITTSTON BRINK'S GROUP
NOTES TO FINANCIAL INFORMATION
(1) The Pittston Company (the "Company") has three classes of common stock:
Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston BAX Group
Common Stock ("BAX Stock") and Pittston Minerals Group Common Stock
("Minerals Stock"), which were designed to provide shareholders with
separate securities reflecting the performance of the Pittston Brink's
Group (the "Brink's Group"), Pittston BAX Group (the "BAX Group") and
Pittston Minerals Group (the "Minerals Group"), respectively, without
diminishing the benefits of remaining a single corporation or precluding
future transactions affecting any of the Groups.
The financial information for the Brink's Group includes the results of the
Company's Brink's, Incorporated ("Brink's") and Brink's Home Security, Inc.
("BHS") businesses. It is prepared using the amounts included in the
Company's consolidated financial statements. Accordingly, the Company's
consolidated financial statements must be read in connection with the
Brink's Group's financial data.
(2) Under the share repurchase programs authorized by the Board of Directors of
the Company, the Company purchased the following shares in the periods
presented:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30 June 30 June 30 June 30
(Dollars in millions) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brink's Stock:
Shares 114,100 13,000 114,100 166,000
Cost $ 4.4 0.3 4.4 4.3
Convertible Preferred Stock:
Shares -- -- 355 --
Cost $ -- -- 0.1 --
Excess carrying
amount (a) $ -- -- 0.02 --
(a) The excess of the carrying amount of the Convertible Preferred Stock
over the cash paid to holders for repurchases made during the periods. This
amount is deducted from preferred dividends in the Company's Statement of
Operations.
(3) The Brink's Group adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," in the first quarter of
1998. SFAS No. 130 established standards for the reporting and display of
comprehensive income and its components in financial statements.
Comprehensive income generally represents all changes in shareholders'
equity except those resulting from investments by or distributions to
shareholders. Total comprehensive income, which is composed of net income
and foreign currency translation adjustments, for the three months ended
June 30, 1998 and 1997 was $18.5 million and $17.9 million, respectively.
Total comprehensive income for the six months ended June 30, 1998 and 1997
was $33.8 million and $29.1 million, respectively.
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(4) In the first quarter of 1998, the Brink's Group purchased 62% (representing
nearly all the remaining shares) of its French affiliate ("Brink's S.A.")
for payments aggregating US $39 million over three years. The acquisition
was funded through an initial payment made at closing of $9 million and a
note to the seller for a principal amount of approximately the equivalent
of US $28 million payable in annual installments plus interest through
2001. The acquisition has been accounted for as a purchase. Based on a
preliminary evaluation which is subject to additional review, the estimated
fair value of the additional assets recorded, including goodwill,
approximated $134 million and includes $9 million in cash. Estimated
liabilities assumed of $98 million included previously existing debt of
approximately $49 million, which includes borrowings of $19 million and
capital leases of $30 million.
(5) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
(6) Financial information for the Minerals Group, which includes the results of
the Pittston Coal Company and Pittston Mineral Ventures operations, and the
BAX Group which includes the results of the Company's BAX Global Inc.
business, is available upon request.
<PAGE>
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THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT Three Months Ended June 30 Six Months Ended June 30
PER SHARE AMOUNTS) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 134,408 157,812 284,306 316,695
Operating revenues 792,696 668,342 1,505,462 1,291,135
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Net sales and operating revenues 927,104 826,154 1,789,768 1,607,830
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of sales 133,278 153,836 277,442 307,248
Operating expenses 658,680 553,434 1,254,451 1,072,253
Selling, general and administrative
expenses 102,732 94,455 201,988 170,098
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Total costs and expenses 894,690 801,725 1,733,881 1,549,599
- -----------------------------------------------------------------------------------------------------------------------------------
Other operating income, net 3,089 2,875 6,116 6,451
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 35,503 27,304 62,003 64,682
Interest income 1,067 991 2,248 2,010
Interest expense (9,527) (6,422) (16,911) (11,986)
Other income (expense), net 1,017 (1,899) (418) (4,288)
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 28,060 19,974 46,922 50,418
Provision for income taxes 7,298 5,311 13,332 14,414
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 20,762 14,663 33,590 36,004
Preferred stock dividends, net (887) (902) (1,751) (1,803)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income attributed to common shares $ 19,875 13,761 31,839 34,201
- -----------------------------------------------------------------------------------------------------------------------------------
PITTSTON BRINK'S GROUP:
Net income attributed to common shares $ 20,570 17,739 37,607 33,045
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per common share:
Basic $ .53 .46 .97 .86
Diluted .52 .46 .96 .85
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 38,713 38,230 38,596 38,209
Diluted 39,206 38,703 39,143 38,659
- -----------------------------------------------------------------------------------------------------------------------------------
PITTSTON BAX GROUP:
Net income (loss) attributed to common
shares $ 989 (1,913) (1,977) 3,175
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share:
Basic $ .05 (.10) (.10) .16
Diluted .05 (.10) (.10) .16
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 19,524 19,471 19,501 19,439
Diluted 19,693 19,471 19,501 19,942
- -----------------------------------------------------------------------------------------------------------------------------------
PITTSTON MINERALS GROUP:
Net loss attributed to common
shares $ (1,684) (2,065) (3,791) (2,019)
- -----------------------------------------------------------------------------------------------------------------------------------
Net loss per common share:
Basic $ (.20) (.26) (.46) (.25)
Diluted (.20) (.26) (.46) (.25)
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 8,309 8,068 8,267 8,035
Diluted 8,309 8,068 8,267 8,035
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
(IN THOUSANDS) 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 70,290 69,878
Accounts receivable, net of estimated
amounts uncollectible 594,773 531,317
Inventories and other current assets 135,258 125,610
- -----------------------------------------------------------------------------------------------------------------------------------
Total current assets 800,321 726,805
Property, plant and equipment, at cost, net of
accumulated depreciation, depletion
and amortization 798,953 647,642
Intangibles, net of accumulated amortization 344,469 301,395
Other assets 298,902 320,102
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 2,242,645 1,995,944
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 742,824 643,673
Long-term debt, less current maturities 328,984 191,812
Postretirement benefits other than pensions 235,385 231,451
Workers' compensation and other claims 99,480 106,378
Other liabilities 127,296 137,012
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,533,969 1,310,326
Shareholders' equity 708,676 685,618
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 2,242,645 1,995,944
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
(IN THOUSANDS) 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 33,590 36,004
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 73,318 60,824
Provision for aircraft heavy maintenance 18,580 16,382
Provision for deferred income taxes 6,201 5,117
Other, net 13,194 10,469
Changes in operating assets and liabilities
net of effects of acquisitions and dispositions:
Decrease (increase) in receivables 701 (15,870)
Increase in inventories and other
current assets (6,350) (24,067)
(Decrease) increase in current liabilities (40,735) 490
Other, net (16,331) (3,807)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 82,168 85,542
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (122,660) (82,236)
Proceeds from disposal of property,
plant and equipment 14,711 3,698
Aircraft heavy maintenance (20,524) (19,350)
Acquisitions and related contingent payments,
net of cash acquired (34,361) (54,094)
Dispositions of other assets and investments 8,482 --
Other, net (4,539) 6,996
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (158,891) (144,986)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net additions to debt 90,812 90,819
Share and other equity activity (13,677) (12,595)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 77,135 78,224
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 412 18,780
Cash and cash equivalents at beginning of period 69,878 41,217
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 70,290 59,997
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED NOTES TO FINANCIAL INFORMATION
(1) The Pittston Company (the "Company") has three classes of common
stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston
BAX Group Common Stock ("BAX Stock") and Pittston Minerals Group
Common Stock ("Minerals Stock"), which were designed to provide
shareholders with separate securities reflecting the performance of
the Pittston Brink's Group (the "Brink's Group"), Pittston BAX Group
(the "BAX Group") and Pittston Minerals Group (the "Minerals Group"),
respectively, without diminishing the benefits of remaining a single
corporation or precluding future transactions affecting any of the
Groups.
(2) Under the share repurchase programs authorized by the Board of
Directors of the Company, the Company purchased the following shares
in the periods presented:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30 June 30 June 30 June 30
(Dollars in millions) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brink's Stock:
Shares 114,100 13,000 114,100 166,000
Cost $ 4.4 0.3 4.4 4.3
BAX Stock:
Shares 227,400 -- 404,932 132,100
Cost $ 3.7 -- 7.2 2.6
Convertible Preferred Stock:
Shares -- -- 355 --
Cost $ -- -- 0.1 --
Excess carrying
amount (a) $ -- -- 0.02 --
</TABLE>
(a) The excess of the carrying amount of the Convertible Preferred Stock
over the cash paid to holders for repurchases made during the periods. This
amount is deducted from preferred dividends in the Company's Statement of
Operations.
(3) The Pittston Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," in the first quarter of
1998. SFAS No. 130 established standards for the reporting and display of
comprehensive income and its components in financial statements.
Comprehensive income generally represents all changes in shareholders'
equity except those resulting from investments by or distributions to
shareholders. Total comprehensive income, which is composed of net income
and foreign currency translation adjustments, for the three months ended
June 30, 1998 and 1997 was $16.3 million and $12.9 million, respectively.
Total comprehensive income for the six months ended June 30, 1998 and 1997
was $27.2 million and $27.6 million, respectively.
(4) In the first quarter of 1998, the Company purchased 62% (representing
nearly all the remaining shares) of its Brink's affiliate in France
("Brink's S.A.") for payments aggregating US $39 million over three years.
The acquisition was funded through an initial payment made at closing of $9
million and a note to the seller for a principal amount of approximately
the equivalent of US $28 million payable in annual installments plus
interest through 2001. The acquisition has been accounted for as a
purchase. Based on a preliminary evaluation which is subject to additional
review, the estimated fair value of the additional assets recorded,
including goodwill, approximated $134 million and includes $9 million in
cash. Estimated liabilities assumed of $98 million included previously
existing debt of approximately $49 million, which includes borrowings of
$19 million and capital leases of $30 million.
<PAGE>
<PAGE>
(5) On April 30, 1998, the Company acquired the privately held Air Transport
International LLC for a purchase price of approximately $29 million. The
acquisition was funded through the revolving credit portion of the
Company's credit agreement with a syndicate of banks and was accounted for
as a purchase. Based on a preliminary evaluation which is subject to
additional review, the estimated fair value of the assets acquired and
liabilities assumed approximated $33 million and $4 million, respectively.
(6) During the second quarter of 1998, the Company's Coal Operations disposed
of certain assets of its Elkay mining operation in West Virginia. The
assets were sold for cash of approximately $18 million, resulting in a
pretax loss of $2.2 million. In addition, in July, the Company's Coal
Operations completed the sale of two idle properties in West Virginia and a
loading dock in Kentucky for an expected pre-tax gain of approximately $5
million.
(7) Effective January 1, 1998, the Company implemented Statement of Position
("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed
for Internal Use." SOP No. 98-1 requires that certain costs related to the
development or purchase of internal use software be capitalized and
amortized over the estimated useful life of the software.
(8) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
<PAGE>
<PAGE>
PITTSTON BAX GROUP EARNS
$.05 PER SHARE IN THE SECOND QUARTER
Richmond, VA - July 29, 1998 - Pittston BAX Group reported net income of
$1.0 million ($.05 per share) in the second quarter ended June 30, 1998. A year
earlier, BAX reported a net loss of $1.9 million ($.10 per share) including
special consulting expenses of $12.5 million (pre-tax) or $.40 per share (after
tax). Consolidated worldwide revenue increased 8% to $432.9 million over the
$399.6 million reported in the prior year's quarter.
For the first six months of 1998, worldwide revenue increased 8% to
$835.3 million compared to $771.0 million for the comparable period in 1997. The
year-to-date net loss was $2.0 million ($.10 per share). A year earlier, net
income was $3.2 million ($.16 per share) including the special consulting
expenses.
INTERNATIONAL
BAX Global's international revenue rose 11% in the second quarter to
$279.9 million from $253.0 million in the comparable 1997 period. International
expedited freight services revenue increased 3% to $219.4 million with higher
volumes partially offset by lower yields (revenue per pound) reflecting a
continued shift in the traffic mix with lower exports to higher yielding Asian
markets. Other
1
<PAGE>
<PAGE>
international revenue, which consists primarily of customs clearances, logistics
and ocean services, as well as revenue from the recently acquired Air Transport
International LLC ("ATI"), a U.S. based airline, rose 52% to $60.5 million. The
revenue increase was largely due to the acquisition of ATI, and growth in both
ocean services and BAX logistics activities. For the first six months of 1998,
international revenue was $534.0 million, a 10% increase over the $486.0 million
of a year earlier.
International operating profits were $4.2 million for the quarter
compared to $8.4 million, before special consulting expenses, earned in the
second quarter of 1997. The decrease was primarily due to higher information
technology expenses, inclusion of ATI results and increased provisions for bad
debt expense primarily in Asia. For the first six months of 1998, international
operating profits totaled $9.6 million compared to $15.1 million, before special
consulting expenses, in the first six months of 1997.
INTRA-U.S.
In the second quarter, BAX Global's intra-U.S. expedited freight
services revenue increased 5% to $151.6 million, mainly reflecting higher
volumes and slightly lower yields. For the first six months of 1998, expedited
freight services revenues were $299.0 million, a 6% increase over the year
earlier period.
2
<PAGE>
<PAGE>
Intra-U.S. operating profits were $2.1 million for the quarter compared
to an operating profit of $3.5 million, excluding special consulting expenses,
in the second quarter a year ago. For the first six months of 1998, the
intra-U.S. operating loss was $2.9 million compared to an operating profit of
$7.6 million, before special consulting expenses, in the prior year. Lower
operating profits in 1998 reflect increased infrastructure costs designed to
enhance service levels and higher information technology expenses including Year
2000 initiatives.
C. Robert Campbell was elected President and Chief Executive Officer of
BAX Global Inc. effective June 8, 1998. Mr. Campbell brings thirty years of
relevant professional experience including significant transportation and
logistics experience during a twenty-one year career with Ryder System, Inc.,
where he last served as Executive Vice President. Prior to joining BAX Global,
Mr. Campbell served as Executive Vice President of Advantica Restaurant Group,
Inc.
Mr. Campbell stated that, "initially my three highest priorities are to
(1) focus on enhancing service levels, a process already underway; (2) continue
margin improvement initiatives begun in June; and (3) expand at a faster rate
internationally."
3
<PAGE>
<PAGE>
FINANCIAL-CONSOLIDATED
The Pittston Company (the "Company") reported consolidated revenue of
$927.1 million in the second quarter ended June 30, 1998 compared to $826.2
million for the comparable period in 1997. Net income was $20.8 million compared
to $14.7 million in the prior year's quarter. Total debt at June 30, 1998 was
$426.2 million. For the first six months of 1998, consolidated revenue was
$1,790 million and net income was $33.6 million. A year ago, consolidated
revenue for the first six months was $1,608 million and net income was $36.0
million. Consolidated cash flow from operating activities totaled $82.2 million
for the six months ended June 30, 1998.
During the second quarter of 1998, under the share repurchase programs
authorized by the Board of Directors of the Company, the Company purchased
227,400 shares of Pittston BAX Group Common Stock at a cost of $3.7 million and
114,100 shares of Pittston Brink's Group Common Stock at a cost of $4.4 million.
As of June 30, 1998, the company had remaining authority to purchase over time 1
million shares of Pittston Minerals Group Common Stock, 0.9 million shares of
Pittston Brink's Group Common Stock, 0.7 million shares of Pittston BAX Group
Common Stock and an additional $24.2 million of its Series C Convertible
Preferred
4
<PAGE>
<PAGE>
Stock. The aggregate purchase price limitation for all common stock purchases
was $13.4 million at June 30, 1998.
This release contains both historical and forward looking information.
Statements regarding the potential benefits of enhancing service levels, margin
improvement initiatives, and expanding at a faster rate internationally are
subject to known and unknown risks, uncertainties and contingencies, which could
cause actual results, performance or achievements to differ materially from
those which are anticipated. Such risks, uncertainties and contingencies, many
of which are beyond the control of the BAX Group and The Pittston Company,
include, but are not limited to, overall domestic and international economic and
business conditions, the domestic and international demand for the BAX Global's
services, pricing and other competitive factors in the industry, new government
regulations and/or legislative initiatives, variations in costs or expenses, the
consummation and successful integration of the ATI acquisition, changes in the
scope of improvements to information systems and Year 2000 initiatives, delays
or problems in the implementation of Year 2000 initiatives by the BAX Group
and/or its suppliers and customers, and delays or problems in the design and
implementation of improvements to information systems.
* * * * * * * * * *
5
<PAGE>
<PAGE>
Pittston BAX Group Common Stock (NYSE-PZX), Pittston Brink's Group
Common Stock (NYSE-PZB) and Pittston Minerals Group Common Stock (NYSE-PZM)
represent the three classes of common stock of The Pittston Company, a
diversified company with interests in global freight transportation and
logistics management services through BAX Global Inc. (Pittston BAX Group),
security services through Brink's, Incorporated and Brink's Home Security, Inc.
(Pittston Brink's Group), and in mining and minerals exploration through
Pittston Coal Company and Pittston Mineral Ventures (Pittston Minerals Group).
Copies of the Pittston Brink's Group and Pittston Minerals Group earnings
releases are available upon request.
6
<PAGE>
<PAGE>
PITTSTON BAX GROUP
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
BAX GLOBAL INC.
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT Three Months Ended June 30 Six Months Ended June 30
PER POUND/SHIPMENT AMOUNTS) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Intra-U.S.:
Expedited freight services $ 151,642 144,668 299,040 281,340
Other 1,294 1,890 2,239 3,612
- -----------------------------------------------------------------------------------------------------------------------------------
Total Intra-U.S. 152,936 146,558 301,279 284,952
International:
Expedited freight services(a) 219,436 213,321 425,888 411,450
Other 60,512 39,688 108,150 74,574
- -----------------------------------------------------------------------------------------------------------------------------------
Total International 279,948 253,009 534,038 486,024
Total operating revenues $ 432,884 399,567 835,317 770,976
- -----------------------------------------------------------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Intra-U.S. (b) $ 2,082 (1,252) (2,895) 2,865
International (b) 4,197 687 9,604 7,326
- -----------------------------------------------------------------------------------------------------------------------------------
Total operating profit (loss) $ 6,279 (565) 6,709 10,191
- -----------------------------------------------------------------------------------------------------------------------------------
Expedited freight services
shipment growth rate (c) 1.1% 0.6% 1.2% (0.6%)
Expedited freight services weight growth rate (c):
Intra-U.S. 8.0% 3.1% 8.5% 2.0%
International 8.0% 7.9% 8.4% 5.2%
Worldwide 8.0% 5.7% 8.4% 3.7%
- -----------------------------------------------------------------------------------------------------------------------------------
Expedited freight services
weight (millions of pounds) 402.5 372.6 784.0 723.1
Expedited freight services
shipments (thousands) 1,345 1,330 2,635 2,605
- -----------------------------------------------------------------------------------------------------------------------------------
Expedited freight services average:
Yield (revenue per pound) (a) $ .922 .961 .925 .958
Revenue per shipment (a) $ 276 269 275 266
Weight per shipment (pounds) 299 280 298 278
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Prior period's international expedited freight revenues have been
reclassified to conform to the current period classification.
(b) The three month period ended June 30, 1998 includes $2.8 million
($1.0 million Intra-U.S. and $1.8 million International) related to
incremental technology expenditures, including Year 2000 initiatives.
The six month period ended June 30, 1998 includes $6.3 million ($2.6
million Intra-U.S. and $3.7 million International) related to incremental
technology expenditures, including Year 2000 initiatives, partially
offset by several non-recurring items. The three and six month periods
ended June 30, 1997 include $12.5 million of consulting expenses related to the
redesign of BAX Global's business processes and new information system
architecture of which $4.75 million and $7.75 million was attributed to
Intra-U.S. and International, respectively.
(c) Compared to the same period in the prior year.
<PAGE>
<PAGE>
PITTSTON BAX GROUP
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT Three Months Ended June 30 Six Months Ended June 30
PER SHARE AMOUNTS) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenues $ 432,884 399,567 835,317 770,976
- ----------------------------------------------------------------------------------------------------------------------------
Operating expenses 385,157 355,693 747,496 686,604
Selling, general and administrative
expenses 44,263 46,852 87,877 79,023
- ----------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 429,420 402,545 835,373 765,627
Other operating income, net 474 859 341 1,508
- ----------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) 3,938 (2,119) 285 6,857
Interest income 224 145 483 475
Interest expense (2,122) (1,066) (3,340) (2,012)
Other expense, net (468) -- (566) (281)
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes 1,572 (3,040) (3,138) 5,039
Provision (credit) for income taxes 583 (1,127) (1,161) 1,864
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 989 (1,913) (1,977) 3,175
- ----------------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share:
Basic $ .05 (.10) (.10) .16
Diluted .05 (.10) (.10) .16
- ----------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 19,524 19,471 19,501 19,439
Diluted 19,693 19,471 19,501 19,942
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEGMENT INFORMATION
<TABLE>
<S> <C> <C> <C> <C>
Operating revenues:
BAX Global $ 432,884 399,567 835,317 770,976
- ----------------------------------------------------------------------------------------------------------------------------
Operating profit (loss):
BAX Global $ 6,279 (565) 6,709 10,191
General corporate expense (2,341) (1,554) (6,424) (3,334)
- ----------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) $ 3,938 (2,119) 285 6,857
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
PITTSTON BAX GROUP
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
(IN THOUSANDS) 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 24,406 28,790
Accounts receivable, net of estimated amounts
uncollectible 294,430 306,806
Inventories and other current assets 21,728 19,568
- ---------------------------------------------------------------------------------------------------------------------------
Total current assets 340,564 355,164
Property, plant and equipment, at cost, net
of accumulated depreciation and amortization 200,064 128,632
Intangibles, net of accumulated amortization 177,995 174,791
Other assets 41,506 42,856
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $ 760,129 701,443
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities $ 319,985 312,065
Long-term debt, less current maturities 99,290 37,016
Other liabilities 24,581 28,652
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 443,856 377,733
Shareholder's equity 316,273 323,710
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $ 760,129 701,443
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
PITTSTON BAX GROUP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
(IN THOUSANDS) 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (1,977) 3,175
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization 16,511 14,122
Provision for aircraft heavy maintenance 18,580 16,382
Other, net 4,532 3,705
Changes in operating assets and liabilities, net of effects of acquisitions:
Decrease (increase) in receivables 20,401 (13,493)
Increase in inventories and other current assets (1,461) (3,563)
(Decrease) increase in current liabilities (25,581) 5,873
Other, net (808) 1,380
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 30,197 27,581
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (44,536) (10,973)
Aircraft heavy maintenance (20,524) (19,350)
Acquisitions, net of cash acquired (28,835) --
Other, net (644) 973
- ---------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (94,539) (29,350)
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net additions to debt 67,914 9,866
Payments from Minerals Group -- 7,730
Share and other equity activity, net (7,956) (3,732)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 59,958 13,864
- ---------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents (4,384) 12,095
Cash and cash equivalents at beginning of period 28,790 17,818
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 24,406 29,913
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
PITTSTON BAX GROUP
NOTES TO FINANCIAL INFORMATION
(1) The Pittston Company (the "Company") has three classes of common
stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston
BAX Group Common Stock ("BAX Stock") and Pittston Minerals Group
Common Stock ("Minerals Stock"), which were designed to provide
shareholders with separate securities reflecting the performance of
the Pittston Brink's Group (the "Brink's Group"), Pittston BAX Group
(the "BAX Group") and Pittston Minerals Group (the "Minerals Group"),
respectively, without diminishing the benefits of remaining a single
corporation or precluding future transactions affecting any of the
Groups.
The financial information for the BAX Group includes the results of
the Company's BAX Global Inc. business. It is prepared using the
amounts included in the Company's consolidated financial statements.
Accordingly, the Company's consolidated financial statements must be
read in connection with the BAX Group's financial data.
(2) Under the share repurchase programs authorized by the Board of
Directors of the Company, the Company purchased the following shares
in the periods presented:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30 June 30 June 30 June 30
Dollars in millions) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BAX Stock:
Shares 227,400 -- 404,932 132,100
Cost $ 3.7 -- 7.2 2.6
Convertible Preferred Stock:
Shares -- -- 355 --
Cost $ -- -- 0.1 --
Excess carrying
amount (a) $ -- -- 0.02 --
</TABLE>
(a) The excess of the carrying amount of the Convertible Preferred
Stock over the cash paid to holders for repurchases made during the
periods. This amount is deducted from preferred dividends in the
Company's Statement of Operations.
(3) On April 30, 1998, the BAX Group acquired the privately held Air
Transport International LLC for a purchase price of approximately $29
million. The acquisition was funded through the revolving credit
portion of the Company's credit agreement with a syndicate of banks
and was accounted for as a purchase. Based on a preliminary evaluation
which is subject to additional review, the estimated fair value of the
assets acquired and liabilities assumed approximated $33 million and
$4 million, respectively.
(4) The BAX Group adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," in the first
quarter of 1998. SFAS No. 130 established standards for the reporting
and display of comprehensive income and its components in financial
statements. Comprehensive income generally represents all changes in
shareholders' equity except those resulting from investments by or
distributions to shareholders. Total comprehensive income (loss),
which is composed of net income (loss) and foreign currency
translation adjustments, for the three
<PAGE>
<PAGE>
months ended June 30, 1998 and 1997 was $0.6 million and ($2.2)
million, respectively. Total comprehensive (loss) income for the six
months ended June 30, 1998 and 1997 was ($2.0) million and $1.5
million, respectively.
(5) Effective January 1, 1998, the BAX Group implemented a new AICPA
Statement of Position ("SOP") No. 98-1 "Accounting for the Costs of
Computer Software Developed for Internal Use". SOP No. 98-1 requires
that certain costs related to the development or purchase of
internal-use software be capitalized and amortized over the estimated
useful life of the software. As a result of the implementation of SOP
No. 98-1, net income for the three months ended June 30, 1998,
included a benefit of approximately $0.6 million or $.03 per share and
the net loss for the six months ended June 30, 1998, included a
benefit of approximately $1.4 million or $.07 per share for costs
capitalized during those periods which would have been expensed prior
to the implementation of SOP No. 98-1.
(6) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
(7) Financial information for the Minerals Group, which includes the
results of the Pittston Coal Company and Pittston Mineral Ventures
operations, and the Brink's Group, which includes the results of the
Company's Brink's, Incorporated and Brink's Home Security, Inc.
businesses, is available upon request.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT Three Months Ended June 30 Six Months Ended June 30
PER SHARE AMOUNTS) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 134,408 157,812 284,306 316,695
Operating revenues 792,696 668,342 1,505,462 1,291,135
- -----------------------------------------------------------------------------------------------------------------------------------
Net sales and operating revenues 927,104 826,154 1,789,768 1,607,830
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of sales 133,278 153,836 277,442 307,248
Operating expenses 658,680 553,434 1,254,451 1,072,253
Selling, general and administrative
expenses 102,732 94,455 201,988 170,098
- -----------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 894,690 801,725 1,733,881 1,549,599
- -----------------------------------------------------------------------------------------------------------------------------------
Other operating income, net 3,089 2,875 6,116 6,451
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 35,503 27,304 62,003 64,682
Interest income 1,067 991 2,248 2,010
Interest expense (9,527) (6,422) (16,911) (11,986)
Other income (expense), net 1,017 (1,899) (418) (4,288)
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 28,060 19,974 46,922 50,418
Provision for income taxes 7,298 5,311 13,332 14,414
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 20,762 14,663 33,590 36,004
Preferred stock dividends, net (887) (902) (1,751) (1,803)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income attributed to common shares $ 19,875 13,761 31,839 34,201
- -----------------------------------------------------------------------------------------------------------------------------------
PITTSTON BRINK'S GROUP:
Net income attributed to common shares $ 20,570 17,739 37,607 33,045
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per common share:
Basic $ .53 .46 .97 .86
Diluted .52 .46 .96 .85
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 38,713 38,230 38,596 38,209
Diluted 39,206 38,703 39,143 38,659
- -----------------------------------------------------------------------------------------------------------------------------------
PITTSTON BAX GROUP:
Net income (loss) attributed to common
shares $ 989 (1,913) (1,977) 3,175
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share:
Basic $ .05 (.10) (.10) .16
Diluted .05 (.10) (.10) .16
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 19,524 19,471 19,501 19,439
Diluted 19,693 19,471 19,501 19,942
- -----------------------------------------------------------------------------------------------------------------------------------
PITTSTON MINERALS GROUP:
Net loss attributed to common
shares $ (1,684) (2,065) (3,791) (2,019)
- -----------------------------------------------------------------------------------------------------------------------------------
Net loss per common share:
Basic $ (.20) (.26) (.46) (.25)
Diluted (.20) (.26) (.46) (.25)
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 8,309 8,068 8,267 8,035
Diluted 8,309 8,068 8,267 8,035
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
(IN THOUSANDS) 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 70,290 69,878
Accounts receivable, net of estimated
amounts uncollectible 594,773 531,317
Inventories and other current assets 135,258 125,610
- -----------------------------------------------------------------------------------------------------------------------------------
Total current assets 800,321 726,805
Property, plant and equipment, at cost, net of
accumulated depreciation, depletion
and amortization 798,953 647,642
Intangibles, net of accumulated amortization 344,469 301,395
Other assets 298,902 320,102
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 2,242,645 1,995,944
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 742,824 643,673
Long-term debt, less current maturities 328,984 191,812
Postretirement benefits other than pensions 235,385 231,451
Workers' compensation and other claims 99,480 106,378
Other liabilities 127,296 137,012
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,533,969 1,310,326
Shareholders' equity 708,676 685,618
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 2,242,645 1,995,944
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
(IN THOUSANDS) 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 33,590 36,004
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 73,318 60,824
Provision for aircraft heavy maintenance 18,580 16,382
Provision for deferred income taxes 6,201 5,117
Other, net 13,194 10,469
Changes in operating assets and liabilities
net of effects of acquisitions and dispositions:
Decrease (increase) in receivables 701 (15,870)
Increase in inventories and other
current assets (6,350) (24,067)
(Decrease) increase in current liabilities (40,735) 490
Other, net (16,331) (3,807)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 82,168 85,542
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (122,660) (82,236)
Proceeds from disposal of property,
plant and equipment 14,711 3,698
Aircraft heavy maintenance (20,524) (19,350)
Acquisitions and related contingent payments,
net of cash acquired (34,361) (54,094)
Dispositions of other assets and investments 8,482 --
Other, net (4,539) 6,996
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (158,891) (144,986)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net additions to debt 90,812 90,819
Share and other equity activity (13,677) (12,595)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 77,135 78,224
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 412 18,780
Cash and cash equivalents at beginning of period 69,878 41,217
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 70,290 59,997
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED NOTES TO FINANCIAL INFORMATION
(1) The Pittston Company (the "Company") has three classes of common
stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston
BAX Group Common Stock ("BAX Stock") and Pittston Minerals Group
Common Stock ("Minerals Stock"), which were designed to provide
shareholders with separate securities reflecting the performance of
the Pittston Brink's Group (the "Brink's Group"), Pittston BAX Group
(the "BAX Group") and Pittston Minerals Group (the "Minerals Group"),
respectively, without diminishing the benefits of remaining a single
corporation or precluding future transactions affecting any of the
Groups.
(2) Under the share repurchase programs authorized by the Board of
Directors of the Company, the Company purchased the following shares
in the periods presented:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30 June 30 June 30 June 30
(Dollars in millions) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brink's Stock:
Shares 114,100 13,000 114,100 166,000
Cost $ 4.4 0.3 4.4 4.3
BAX Stock:
Shares 227,400 -- 404,932 132,100
Cost $ 3.7 -- 7.2 2.6
Convertible Preferred Stock:
Shares -- -- 355 --
Cost $ -- -- 0.1 --
Excess carrying
amount (a) $ -- -- 0.02 --
</TABLE>
(a) The excess of the carrying amount of the Convertible Preferred Stock
over the cash paid to holders for repurchases made during the periods. This
amount is deducted from preferred dividends in the Company's Statement of
Operations.
(3) The Pittston Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," in the first quarter of
1998. SFAS No. 130 established standards for the reporting and display of
comprehensive income and its components in financial statements.
Comprehensive income generally represents all changes in shareholders'
equity except those resulting from investments by or distributions to
shareholders. Total comprehensive income, which is composed of net income
and foreign currency translation adjustments, for the three months ended
June 30, 1998 and 1997 was $16.3 million and $12.9 million, respectively.
Total comprehensive income for the six months ended June 30, 1998 and 1997
was $27.2 million and $27.6 million, respectively.
(4) In the first quarter of 1998, the Company purchased 62% (representing
nearly all the remaining shares) of its Brink's affiliate in France
("Brink's S.A.") for payments aggregating US $39 million over three years.
The acquisition was funded through an initial payment made at closing of $9
million and a note to the seller for a principal amount of approximately
the equivalent of US $28 million payable in annual installments plus
interest through 2001. The acquisition has been accounted for as a
purchase. Based on a preliminary evaluation which is subject to additional
review, the estimated fair value of the additional assets recorded,
including goodwill, approximated $134 million and includes $9 million in
cash. Estimated liabilities assumed of $98 million included previously
existing debt of approximately $49 million, which includes borrowings of
$19 million and capital leases of $30 million.
<PAGE>
<PAGE>
(5) On April 30, 1998, the Company acquired the privately held Air Transport
International LLC for a purchase price of approximately $29 million. The
acquisition was funded through the revolving credit portion of the
Company's credit agreement with a syndicate of banks and was accounted for
as a purchase. Based on a preliminary evaluation which is subject to
additional review, the estimated fair value of the assets acquired and
liabilities assumed approximated $33 million and $4 million, respectively.
(6) During the second quarter of 1998, the Company's Coal Operations disposed
of certain assets of its Elkay mining operation in West Virginia. The
assets were sold for cash of approximately $18 million, resulting in a
pretax loss of $2.2 million. In addition, in July, the Company's Coal
Operations completed the sale of two idle properties in West Virginia and a
loading dock in Kentucky for an expected pre-tax gain of approximately $5
million.
(7) Effective January 1, 1998, the Company implemented Statement of Position
("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed
for Internal Use." SOP No. 98-1 requires that certain costs related to the
development or purchase of internal use software be capitalized and
amortized over the estimated useful life of the software.
(8) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
<PAGE>
<PAGE>
PITTSTON MINERALS GROUP REPORTS
SECOND QUARTER RESULTS
Richmond, VA - July 29, 1998 - Pittston Minerals Group reported a net
loss, before preferred dividends, of $0.8 million ($.20 per common share) in the
second quarter ended June 30, 1998. A year earlier the unit reported a net loss,
before preferred dividends, of $1.2 million ($.26 per common share). Through six
months the net loss, before preferred dividends, was $2.0 million ($.46 per
common share) compared to a net loss, before preferred dividends, of $0.2
million ($.25 per common share) in the 1997 period.
PITTSTON COAL COMPANY
Second quarter net sales were $130.2 million compared to $154.1 million
in the same period a year ago. The coal segment's operating loss was $1.7
million in the second quarter which included a loss of $2.2 million relating to
the sale of certain assets. A year earlier, the unit reported an operating
profit of $1.2 million.
Coal production totaled 3.4 million tons in the quarter compared to 4.4
million tons in last year's second quarter. During the quarter, Pittston Coal
Company sold 4.3 million tons of coal compared to 5.1 million tons in the second
quarter of 1997. Coal realization per ton increased to $29.73 in the current
quarter from $29.57
1
<PAGE>
<PAGE>
a year earlier due in large part to a higher proportion of metallurgical sales.
Cost of coal sold per ton increased to $27.72 in the second quarter 1998
compared with $27.47 a year earlier resulting in a decline in gross margins from
coal operations to $2.01 per ton from $2.10 in the prior year quarter.
Production and sales volume, realization and cost per ton in the 1998 quarter
were impacted by lower tonnage and changes in product mix resulting from the
sale of certain coal assets as discussed below.
Prices for metallurgical and steam coal continued to be weak in the
quarter, as were prices for natural gas. The Company does not expect to
participate significantly in the spot market for steam coal this year as
currently anticipated 1998 production is nearly fully committed under long term
contracts.
During the quarter, the company disposed of certain assets of its Elkay
mining operation in Logan County, West Virginia, which produced about 1.0
million tons of coal through April 1998. The assets were sold for cash of
approximately $18 million resulting in a pre-tax loss of $2.2 million. In
addition, in July the company completed the sale of two idle properties in West
Virginia and its Sandlick, Kentucky loading dock while retaining a throughput
arrangement. As a result, the company expects to record a pre-tax gain of
approximately $5 million in the third quarter.
2
<PAGE>
<PAGE>
These asset disposals continue the company's strategy of disposing of
idle and under-performing assets, while focusing on its core metallurgical and
steam coal operations. Later this year the company plans to begin to develop a
major underground metallurgical coal mine on reserves owned by the company in
Virginia. At full production, scheduled for 2001, this mine is expected to
produce 1.3 million tons per year from a reserve of 15.0 million tons. The coal
can be processed at either the company's Ramsey or McClure preparation plants to
serve customers on either the CSX or Norfolk Southern railroads.
PITTSTON MINERAL VENTURES
Pittston Mineral Ventures (PMV) reported a $0.3 million operating loss
in the second quarter of 1998, compared to a $1.3 million loss in the same
period last year. Operations at the Stawell gold mine, in which PMV has a
combined 67% direct and indirect interest, improved from a year ago with gold
production increasing from 18,600 ounces to 23,500 ounces. Average cash costs of
gold sold improved to US $219 per ounce from US $370 per ounce in the second
quarter of 1997, which had been impacted by lower production and higher costs
associated with the collapse of a ventilation shaft during its construction.
Realization declined from US $385 per ounce to US $357 per ounce.
3
<PAGE>
<PAGE>
Equity earnings from PMV's interest in Mining Project Investors (MPI) in
Australia were essentially unchanged from year ago levels. However, these were
significantly below expectations due to the impact of depressed nickel prices on
MPI's 50% owned Silver Swan nickel mine. Production volumes and costs at
Silver Swan were in line with expectations.
FINANCIAL-CONSOLIDATED
The Pittston Company (the "Company") reported consolidated revenues of
$927.1 million in the second quarter ended June 30, 1998 compared to $826.2
million for the comparable period in 1997. Net income was $20.8 million compared
to $14.7 million in the prior year's quarter. Total debt at June 30, 1998 was
$426.2 million. For the first six months of 1998, consolidated revenues were
$1,790 million and net income was $33.6 million. A year ago, consolidated
revenues for the first six months were $1,608 million and net income was $36.0
million. Consolidated cash flow from operating activities totaled $82.2 million
for the six months ended June 30, 1998.
During the second quarter of 1998, under the share repurchase programs
authorized by the Board of Directors of the Company, the Company purchased
227,400 shares of Pittston BAX Group Common Stock at a cost of $3.7 million and
114,100 shares of Pittston Brink's Group Common Stock at a cost of $4.4 million.
4
<PAGE>
<PAGE>
As of June 30, 1998, the company had remaining authority to purchase over time 1
million shares of Pittston Minerals Group Common Stock, 0.9 million shares of
Pittston Brink's Group Common Stock, 0.7 million shares of Pittston BAX Group
Common Stock and an additional $24.2 million of its Series C Convertible
Preferred Stock. The aggregate purchase price limitation for all common stock
purchase was $13.4 million at June 30, 1998.
This release contains both historical and forward looking information.
Statements concerning spot steam coal sales during 1998 and possible results
from PMV's gold exploration program, involve forward looking information which
is subject to known and unknown risks, uncertainties and contingencies, which
could cause actual results, performance or achievements to differ materially
from those which are anticipated. Such risks, uncertainties and contingencies,
many of which are beyond the control of the Minerals Group and The Pittston
Company include, but are not limited to, overall economic and business
conditions, the demand for the Minerals Group's products, geological conditions,
pricing and other competitive factors in the industry, new government
regulations and/or legislative initiatives, contractual disputes with customers
and uncertainty regarding the ultimate results of exploration activity.
* * * * * * * * * *
5
<PAGE>
<PAGE>
Pittston Minerals Group Common Stock (NYSE-PZM), Pittston Brink's Group
Common Stock (NYSE-PZB) and Pittston BAX Group Common Stock (NYSE-PZX) represent
the three classes of common stock of The Pittston Company, a diversified company
with interests in mining and minerals exploration through Pittston Coal Company
and Pittston Mineral Ventures (Pittston Minerals Group), security services
through Brink's, Incorporated and Brink's Home Security, Inc. (Pittston Brink's
Group) and global freight transportation and logistics management services
through BAX Global Inc. (Pittston BAX Group). Copies of the Pittston Brink's
Group and Pittston BAX Group earnings releases are available upon request.
6
<PAGE>
<PAGE>
PITTSTON MINERALS GROUP
SUPPLEMENTAL FINANCIAL DATA
(UNAUDITED)
PITTSTON COAL COMPANY
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
(IN THOUSANDS) 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 130,176 154,073 276,096 308,666
Operating (loss) profit $ (1,714) 1,232 788 4,855
COAL SALES (Tons):
Metallurgical 1,995 1,823 3,926 3,714
Utility and industrial 2,312 3,294 5,235 6,523
- ---------------------------------------------------------------------------------------------------------------------------
Total coal sales 4,307 5,117 9,161 10,237
- ---------------------------------------------------------------------------------------------------------------------------
PRODUCTION/PURCHASED (Tons):
Deep 1,368 1,324 2,757 2,426
Surface 1,841 2,739 3,810 5,398
Contract 200 373 442 736
- ---------------------------------------------------------------------------------------------------------------------------
3,409 4,436 7,009 8,560
Purchased 1,046 963 2,011 2,303
- ---------------------------------------------------------------------------------------------------------------------------
Total 4,455 5,399 9,020 10,863
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
(IN THOUSANDS, Three Months Ended June 30 Six Months Ended June 30
EXCEPT PER TON DATA) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net coal sales (a) $ 128,053 151,303 272,029 304,001
Current production cost
of coal sold (a) 119,387 140,554 251,894 282,126
- --------------------------------------------------------------------------------------------------------------------------
Coal margin 8,666 10,749 20,135 21,875
Non-coal margin 623 527 1,239 1,245
Other operating income, net 2,742 2,078 5,071 5,783
- ---------------------------------------------------------------------------------------------------------------------------
Margin and other income 12,031 13,354 26,445 28,903
- ---------------------------------------------------------------------------------------------------------------------------
Other costs and expenses:
Idle equipment and closed mines 2,582 250 3,285 557
Inactive employee cost 6,740 7,097 13,695 13,780
Selling, general and
administrative expenses 4,423 4,775 8,677 9,711
- ---------------------------------------------------------------------------------------------------------------------------
Total other costs and expenses 13,745 12,122 25,657 24,048
- ---------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit $ (1,714) 1,232 788 4,855
- ---------------------------------------------------------------------------------------------------------------------------
Coal margin per ton:
Realization $ 29.73 29.57 29.69 29.70
Current production costs 27.72 27.47 27.49 27.56
- ---------------------------------------------------------------------------------------------------------------------------
Coal margin $ 2.01 2.10 2.20 2.14
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes non-coal components.
<PAGE>
<PAGE>
PITTSTON MINERAL VENTURES
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT Three Months Ended June 30 Six Months Ended June 30
OUNCE AND PER OUNCE DATA) 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stawell Gold Mine:
Gold sales $ 4,217 3,719 8,173 8,000
Other revenue 15 20 37 29
- ---------------------------------------------------------------------------------------------------------------------------
Net sales 4,232 3,739 8,210 8,029
Cost of sales (a) 3,071 3,666 5,742 7,297
Selling, general and
administrative expenses (a) 248 381 539 679
- ---------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 3,319 4,047 6,281 7,976
- ---------------------------------------------------------------------------------------------------------------------------
Operating profit (loss) -
Stawell Gold Mine 913 (308) 1,929 53
Other operating expense, net (1,191) (1,002) (2,254) (1,818)
- ---------------------------------------------------------------------------------------------------------------------------
Operating loss $ (278) (1,310) (325) (1,765)
- ---------------------------------------------------------------------------------------------------------------------------
Stawell Gold Mine:
Mineral Ventures' 50% direct share:
Ounces sold 11,809 9,665 22,955 20,241
Ounces produced 11,743 9,315 22,899 20,266
Average per ounce sold (US$):
Realization $ 357 385 356 395
Cash cost 219 370 213 348
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Excludes $1,062 and $1,970 of non-Stawell related selling, general and
administrative expenses for the three months and six months ended June 30, 1998,
respectively. Excludes $26 and $797, and $68 and $1,414 of non-Stawell related
cost of sales and selling, general and administrative expenses for the three
months and six months ended June 30, 1997. Such costs are reclassified to cost
of sales and selling, general and administrative expenses in the Minerals Group
statement of operations.
<PAGE>
<PAGE>
PITTSTON MINERALS GROUP
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT Three Months Ended June 30 Six Months Ended June 30
PER SHARE AMOUNTS) 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 134,408 157,812 284,306 316,695
- ---------------------------------------------------------------------------------------------------------------------------
Cost of sales 133,278 153,836 277,442 307,248
Selling, general and
administrative expenses 7,764 7,307 16,851 14,716
- ---------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 141,042 161,143 294,293 321,964
Other operating income, net 2,611 1,899 4,785 5,447
- ---------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit (4,023) (1,432) (5,202) 178
Interest income 313 335 614 617
Interest expense (2,449) (2,734) (5,043) (5,359)
Other income (expense), net 1 (452) 1 (902)
- ---------------------------------------------------------------------------------------------------------------------------
Loss before income taxes (6,158) (4,283) (9,630) (5,466)
Credit for income taxes (5,361) (3,120) (7,590) (5,250)
- ---------------------------------------------------------------------------------------------------------------------------
Net loss (797) (1,163) (2,040) (216)
Preferred stock dividends, net (887) (902) (1,751) (1,803)
- ---------------------------------------------------------------------------------------------------------------------------
Net loss attributed to
common shares $ (1,684) (2,065) (3,791) (2,019)
- ---------------------------------------------------------------------------------------------------------------------------
Net loss per common share:
Basic $ (.20) (.26) (.46) (.25)
Diluted (.20) (.26) (.46) (.25)
- ---------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 8,309 8,068 8,267 8,035
Diluted 8,309 8,068 8,267 8,035
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEGMENT INFORMATION
<TABLE>
<S> <C> <C> <C> <C>
Net sales:
Coal Operations $ 130,176 154,073 276,096 308,666
Mineral Ventures 4,232 3,739 8,210 8,029
- ---------------------------------------------------------------------------------------------------------------------------
Net sales $ 134,408 157,812 284,306 316,695
- ---------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit:
Coal Operations $ (1,714) 1,232 788 4,855
Mineral Ventures (278) (1,310) (325) (1,765)
- ---------------------------------------------------------------------------------------------------------------------------
Segment operating (loss) profit (1,992) (78) 463 3,090
General corporate expense (2,031) (1,354) (5,665) (2,912)
- ---------------------------------------------------------------------------------------------------------------------------
Operating (loss) profit $ (4,023) (1,432) (5,202) 178
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
PITTSTON MINERALS GROUP
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
(IN THOUSANDS) 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,591 3,394
Accounts receivable, net of estimated
amounts uncollectible 74,761 63,599
Inventories and other current assets 68,374 65,527
- ---------------------------------------------------------------------------------------------------------------------------
Total current assets 146,726 132,520
Property, plant and equipment, at cost, net
of accumulated depreciation, depletion
and amortization 156,146 172,338
Coal supply contracts, net of accumulated
amortization 27,749 41,703
Intangibles, net of accumulated amortization 106,590 108,094
Other assets 204,058 199,527
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $ 641,269 654,182
- ---------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities $ 145,732 161,264
Long-term debt, less current maturities 135,130 116,114
Postretirement benefits other than pensions 227,418 223,836
Workers' compensation and other claims 85,724 92,857
Other liabilities 70,952 78,683
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 664,956 672,754
Shareholder's equity (23,687) (18,572)
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $ 641,269 654,182
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
PITTSTON MINERALS GROUP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
(IN THOUSANDS) 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,040) (216)
Adjustments to reconcile net loss to net
cash (used) provided by operating activities:
Depreciation, depletion and amortization 18,114 18,484
Provision for deferred income taxes 438 4,075
Loss (gain) on sale of property, plant and equipment 1,388 (1,093)
Other, net (38) (690)
Changes in operating assets and liabilities, net of effects of acquisitions
and dispositions:
(Increase) decrease in receivables (10,946) 3,475
Decrease (increase) in inventories and other
current assets 4,052 (15,466)
Decrease in current liabilities (8,864) (1,638)
Other, net (6,252) (3,398)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash (used) provided by operating activities (4,148) 3,533
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (12,751) (17,029)
Proceeds from disposal of property, plant and equipment 13,056 2,174
Dispositions of other assets 6,772 --
Other, net (905) (1,287)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities 6,172 (16,142)
- ---------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net additions to debt 18,271 40,451
Payments to BAX Group/Brink's Group, net (16,700) (22,813)
Share and other activity, net (3,398) (4,301)
- ---------------------------------------------------------------------------------------------------------------------------
Net cash (used) provided by financing activities (1,827) 13,337
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 197 728
Cash and cash equivalents at beginning of period 3,394 3,387
- ---------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 3,591 4,115
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
PITTSTON MINERALS GROUP
NOTES TO FINANCIAL INFORMATION
(1) The Pittston Company (the "Company") has three classes of common
stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston
BAX Group Common Stock ("BAX Stock") and Pittston Minerals Group
Common Stock ("Minerals Stock"), which were designed to provide
shareholders with separate securities reflecting the performance of
the Pittston Brink's Group (the "Brink's Group"), Pittston BAX Group
(the "BAX Group") and Pittston Minerals Group (the "Minerals Group"),
respectively, without diminishing the benefits of remaining a single
corporation or precluding future transactions affecting any of the
Groups.
The financial information for the Minerals Group includes the results
of the Pittston Coal Company and Pittston Mineral Ventures operations
of the Company. It is prepared using the amounts included in the
Company's consolidated financial statements. Accordingly, the
Company's consolidated financial statements must be read in connection
with the Minerals Group's financial data.
(2) Under the share repurchase program authorized by the Board of
Directors of the Company, the Company purchased the following shares
in the periods presented:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30 June 30 June 30 June 30
(Dollars in millions) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Convertible Preferred Stock:
Shares -- -- 355 --
Cost $ -- -- 0.1 --
Excess carrying
amount (a) $ -- -- 0.02 --
</TABLE>
(a) The excess of the carrying amount of the Convertible Preferred Stock
over the cash paid to holders for repurchases made during the periods.
This amount is deducted from preferred dividends in the Company's
Statement of Operations.
(3) During the second quarter of 1998, Coal Operations disposed of certain
assets of its Elkay mining operation in West Virginia. The assets were
sold for cash of approximately $18 million, resulting in a pretax loss
of $2.2 million. In addition, in July, Coal Operations completed the
sale of two idle properties in West Virginia and a loading dock in
Kentucky for an expected pre-tax gain of approximately $5 million.
(4) The Minerals Group adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," in the first
quarter of 1998. SFAS No. 130 established standards for the reporting
and display of comprehensive income and its components in financial
statements. Comprehensive income generally represents all changes in
shareholders' equity except those resulting from investments by or
distributions to shareholders. Total comprehensive loss, which is
composed of net loss attributable to common shares and foreign
currency translation adjustments, for the three months ended June 30,
1998 and 1997 was $2.8 million. Total comprehensive loss for the six
months ended June 30, 1998 and 1997 was $4.6 million and $3.0 million,
respectively.
<PAGE>
<PAGE>
(5) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
(6) Financial information for the Brink's Group, which includes the
results of the Company's Brink's, Incorporated and Brink's Home
Security, Inc. businesses, and the BAX Group, which includes the
results of the Company's BAX Global Inc. business, is available upon
request.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT Three Months Ended June 30 Six Months Ended June 30
PER SHARE AMOUNTS) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 134,408 157,812 284,306 316,695
Operating revenues 792,696 668,342 1,505,462 1,291,135
- -----------------------------------------------------------------------------------------------------------------------------------
Net sales and operating revenues 927,104 826,154 1,789,768 1,607,830
- -----------------------------------------------------------------------------------------------------------------------------------
Cost of sales 133,278 153,836 277,442 307,248
Operating expenses 658,680 553,434 1,254,451 1,072,253
Selling, general and administrative
expenses 102,732 94,455 201,988 170,098
- -----------------------------------------------------------------------------------------------------------------------------------
Total costs and expenses 894,690 801,725 1,733,881 1,549,599
- -----------------------------------------------------------------------------------------------------------------------------------
Other operating income, net 3,089 2,875 6,116 6,451
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 35,503 27,304 62,003 64,682
Interest income 1,067 991 2,248 2,010
Interest expense (9,527) (6,422) (16,911) (11,986)
Other income (expense), net 1,017 (1,899) (418) (4,288)
- -----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 28,060 19,974 46,922 50,418
Provision for income taxes 7,298 5,311 13,332 14,414
- -----------------------------------------------------------------------------------------------------------------------------------
Net income 20,762 14,663 33,590 36,004
Preferred stock dividends, net (887) (902) (1,751) (1,803)
- -----------------------------------------------------------------------------------------------------------------------------------
Net income attributed to common shares $ 19,875 13,761 31,839 34,201
- -----------------------------------------------------------------------------------------------------------------------------------
PITTSTON BRINK'S GROUP:
Net income attributed to common shares $ 20,570 17,739 37,607 33,045
- -----------------------------------------------------------------------------------------------------------------------------------
Net income per common share:
Basic $ .53 .46 .97 .86
Diluted .52 .46 .96 .85
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 38,713 38,230 38,596 38,209
Diluted 39,206 38,703 39,143 38,659
- -----------------------------------------------------------------------------------------------------------------------------------
PITTSTON BAX GROUP:
Net income (loss) attributed to common
shares $ 989 (1,913) (1,977) 3,175
- -----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) per common share:
Basic $ .05 (.10) (.10) .16
Diluted .05 (.10) (.10) .16
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 19,524 19,471 19,501 19,439
Diluted 19,693 19,471 19,501 19,942
- -----------------------------------------------------------------------------------------------------------------------------------
PITTSTON MINERALS GROUP:
Net loss attributed to common
shares $ (1,684) (2,065) (3,791) (2,019)
- -----------------------------------------------------------------------------------------------------------------------------------
Net loss per common share:
Basic $ (.20) (.26) (.46) (.25)
Diluted (.20) (.26) (.46) (.25)
- -----------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding:
Basic 8,309 8,068 8,267 8,035
Diluted 8,309 8,068 8,267 8,035
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
(IN THOUSANDS) 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 70,290 69,878
Accounts receivable, net of estimated
amounts uncollectible 594,773 531,317
Inventories and other current assets 135,258 125,610
- -----------------------------------------------------------------------------------------------------------------------------------
Total current assets 800,321 726,805
Property, plant and equipment, at cost, net of
accumulated depreciation, depletion
and amortization 798,953 647,642
Intangibles, net of accumulated amortization 344,469 301,395
Other assets 298,902 320,102
- -----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 2,242,645 1,995,944
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 742,824 643,673
Long-term debt, less current maturities 328,984 191,812
Postretirement benefits other than pensions 235,385 231,451
Workers' compensation and other claims 99,480 106,378
Other liabilities 127,296 137,012
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,533,969 1,310,326
Shareholders' equity 708,676 685,618
- -----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 2,242,645 1,995,944
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30
(IN THOUSANDS) 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 33,590 36,004
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 73,318 60,824
Provision for aircraft heavy maintenance 18,580 16,382
Provision for deferred income taxes 6,201 5,117
Other, net 13,194 10,469
Changes in operating assets and liabilities
net of effects of acquisitions and dispositions:
Decrease (increase) in receivables 701 (15,870)
Increase in inventories and other
current assets (6,350) (24,067)
(Decrease) increase in current liabilities (40,735) 490
Other, net (16,331) (3,807)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 82,168 85,542
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (122,660) (82,236)
Proceeds from disposal of property,
plant and equipment 14,711 3,698
Aircraft heavy maintenance (20,524) (19,350)
Acquisitions and related contingent payments,
net of cash acquired (34,361) (54,094)
Dispositions of other assets and investments 8,482 --
Other, net (4,539) 6,996
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (158,891) (144,986)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net additions to debt 90,812 90,819
Share and other equity activity (13,677) (12,595)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 77,135 78,224
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 412 18,780
Cash and cash equivalents at beginning of period 69,878 41,217
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 70,290 59,997
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
THE PITTSTON COMPANY AND SUBSIDIARIES
CONSOLIDATED NOTES TO FINANCIAL INFORMATION
(1) The Pittston Company (the "Company") has three classes of common
stock: Pittston Brink's Group Common Stock ("Brink's Stock"), Pittston
BAX Group Common Stock ("BAX Stock") and Pittston Minerals Group
Common Stock ("Minerals Stock"), which were designed to provide
shareholders with separate securities reflecting the performance of
the Pittston Brink's Group (the "Brink's Group"), Pittston BAX Group
(the "BAX Group") and Pittston Minerals Group (the "Minerals Group"),
respectively, without diminishing the benefits of remaining a single
corporation or precluding future transactions affecting any of the
Groups.
(2) Under the share repurchase programs authorized by the Board of
Directors of the Company, the Company purchased the following shares
in the periods presented:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Six Months Ended Six Months Ended
June 30 June 30 June 30 June 30
(Dollars in millions) 1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brink's Stock:
Shares 114,100 13,000 114,100 166,000
Cost $ 4.4 0.3 4.4 4.3
BAX Stock:
Shares 227,400 -- 404,932 132,100
Cost $ 3.7 -- 7.2 2.6
Convertible Preferred Stock:
Shares -- -- 355 --
Cost $ -- -- 0.1 --
Excess carrying
amount (a) $ -- -- 0.02 --
</TABLE>
(a) The excess of the carrying amount of the Convertible Preferred Stock
over the cash paid to holders for repurchases made during the periods. This
amount is deducted from preferred dividends in the Company's Statement of
Operations.
(3) The Pittston Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," in the first quarter of
1998. SFAS No. 130 established standards for the reporting and display of
comprehensive income and its components in financial statements.
Comprehensive income generally represents all changes in shareholders'
equity except those resulting from investments by or distributions to
shareholders. Total comprehensive income, which is composed of net income
and foreign currency translation adjustments, for the three months ended
June 30, 1998 and 1997 was $16.3 million and $12.9 million, respectively.
Total comprehensive income for the six months ended June 30, 1998 and 1997
was $27.2 million and $27.6 million, respectively.
(4) In the first quarter of 1998, the Company purchased 62% (representing
nearly all the remaining shares) of its Brink's affiliate in France
("Brink's S.A.") for payments aggregating US $39 million over three years.
The acquisition was funded through an initial payment made at closing of $9
million and a note to the seller for a principal amount of approximately
the equivalent of US $28 million payable in annual installments plus
interest through 2001. The acquisition has been accounted for as a
purchase. Based on a preliminary evaluation which is subject to additional
review, the estimated fair value of the additional assets recorded,
including goodwill, approximated $134 million and includes $9 million in
cash. Estimated liabilities assumed of $98 million included previously
existing debt of approximately $49 million, which includes borrowings of
$19 million and capital leases of $30 million.
<PAGE>
<PAGE>
(5) On April 30, 1998, the Company acquired the privately held Air Transport
International LLC for a purchase price of approximately $29 million. The
acquisition was funded through the revolving credit portion of the
Company's credit agreement with a syndicate of banks and was accounted for
as a purchase. Based on a preliminary evaluation which is subject to
additional review, the estimated fair value of the assets acquired and
liabilities assumed approximated $33 million and $4 million, respectively.
(6) During the second quarter of 1998, the Company's Coal Operations disposed
of certain assets of its Elkay mining operation in West Virginia. The
assets were sold for cash of approximately $18 million, resulting in a
pretax loss of $2.2 million. In addition, in July, the Company's Coal
Operations completed the sale of two idle properties in West Virginia and a
loading dock in Kentucky for an expected pre-tax gain of approximately $5
million.
(7) Effective January 1, 1998, the Company implemented Statement of Position
("SOP") No. 98-1 "Accounting for the Costs of Computer Software Developed
for Internal Use". SOP No. 98-1 requires that certain costs related to the
development or purchase of internal use software be capitalized and
amortized over the estimated useful life of the software.
(8) Certain prior period amounts have been reclassified to conform to the
current period's financial statement presentation.
